Banking crisis: Cyber-squatters cash in

It is not just hedge funds and short-sellers that are looking to cash-in on the global financial meltdown. Cyber-speculators have got in on the act too, snapping up online domain names in a game of guess the brand and the hope of selling their piece of internet property to the highest bidder.

Yesterday the rather long-winded domain name www.bankofamericamerrilllynch.com went up for sale on auction site eBay with an asking price of $1500 (£832).

The seller appears to have registered on the auction site solely to do this deal, having bet that the merger of the two American investment banks earlier this week will eventually lead to a co-branded website. Already former employees of bust rival bank Lehman Brothers have put items such as branded water bottles and shoulder bags on eBay.

But it has not escaped the attention of cyber-squatters that Barclays has snapped up Lehman's American business and already www.barclayslehman.com has been bought and populated with adverts, including one which offers surfers a "free list of banks doomed to fail".

"This shows the ever increasing value of cyber-real estate," according to Jonathan Robinson, chief executive of NetNames, which helps companies get themselves established and defend their position on the internet. "Events are unfolding so fast in the financial services sector that these companies have just not had the time to register these names."

Ever since the creation of domain names there have been speculators who buy up names in the hope that one day a company will want to buy the property off them. The value of names can range from just a few pounds to several million depending on its perceived value.

So far, the world's most valuable domain name is sex.com, which was fraudulently transferred from entrepreneur Gary Kremen's name in the 1990s, but eventually returned after a court battle a decade later.

The reports are disputed, but it is believed Kremen earned between $11m and $14m when he sold up in 2006. Business.com shot into the Guinness Book of Records in 1999 as the world's most expensive domain name after its sale for $7.5m at the height of the dotcom boom in 1999. Several years later, Diamonds.com which as the name suggests is an American jewellery retailer, went for the same amount.

The UK's most expensive domain name, in contrast, is cruises.co.uk which was bought by cruise.co.uk from German travel company Nees Reisen for £560,000 earlier this year.

Companies that want a particular domain name have three options when faced with cyber-speculators: they can follow the legal route and challenge the owner through the courts or go through the international dispute resolution process offered by the World Intellectual Property Organization (WIPO). Or they can just pay the squatter to hand over the domain.

In the past, most cyber real estate speculators have hoped to get paid off. But now cyber-squatters are putting adverts on the sites they have grabbed in the hope of making money from traffic that ends up on the site in the meantime.